Kin Foundation Grant Program: Learnings and Refinement

The purpose of this post is to unpack the Kin Foundation Grant Program including the process, learnings, and steps the Foundation has taken to refine the program since its inception and going forward.

Kin Foundation Mandate

Per the Kin Foundation Transparency Report

“The Kin Foundation’s mandate is to grow the reach and impact of the Kin Ecosystem, an open network of developers unified through the Kin currency.

The principal function of the Kin Foundation is the transparent governance and allocation of the Kin Reserves, which are intended to align incentives of ecosystem participants to grow the adoption of Kin and support the infrastructure that underpins it.

To fulfill its mandate, the Kin Foundation has dedicated resources to specific goals related to developer and user adoption, infrastructure support, research and development, and governance. This is done through a step-by-step process to create the space for iterative development and to test concepts and proposals, with the intent to further decentralize over time.”

As noted in the Foundation’s mandate, the process of allocating the Kin Reserves is an iterative process. The Grant Program has been a key catalyst for ecosystem growth, but it has not come without learnings. In recent weeks there have been questions about the rationale behind specific grants, including a 20 billion Kin grant to the developer Psiphon.

The Kin Foundation is committed to continuing to improve its transparent governance. The questions about Psiphon is a good opportunity to address that specific instance while also sharing context on the broader grant program — both the good and the bad, and the steps we are taking to refine the program.

Grant Program Summary

As of July 27, 2020, there are over 50 active apps in the ecosystem that have collectively gotten more than 35 million people to use Kin so far — more mainstream consumer usage than any other cryptocurrency. This is driven by the growing collective of independent developers all aligned through the common incentive to grow the adoption of Kin.

This is a fundamentally new business model for developers. Making the decision to integrate a new business model is a big decision for an app developer. Providing a grant helps reduce that friction by giving developers an initial stake in Kin, aligning their incentives to the success of the ecosystem.

These grants also help to establish diversity in the app ecosystem. In the early stages, this was the primary way in which developers were compensated. As the ecosystem has matured, the compensation for developers has increasingly transitioned to the Kin Rewards Engine (KRE), an algorithmic incentive protocol that pays developers based on the value they deliver relative to the rest of the ecosystem. The following table outlines the mix of Developer Grants and KRE payouts as outlined in the Transparency Report:

As the Kin Rewards Engine has ramped up, the amount of payouts under the grant structure has decreased in relative proportion.

The amounts budgeted for Developer Grants and the KRE are roughly equal in 2020. This budget is in place to give the Foundation flexibility to allocate Kin to developers for initiatives that advance the interests of the ecosystem collectively. To do this in a fair and meritocratic way, the Foundation launched an official Grant Program in February 2020. This program is open to anyone and follows a multi-step review process with all grants tied to concrete milestones.

Prior to this grant program going live, developer grants were done on a relatively ad-hoc basis. Many of the top apps in the ecosystem started with a grant that predated the process that exists today, which has translated to the momentum we see today. However, it is also important to acknowledge the challenges and find ways to improve.

Learnings from the Psiphon Grant

Last year the Kin Foundation awarded a 20 billion Kin grant to Psiphon, an internet VPN company. This grant has recently come under scrutiny due to its size and Psiphon’s lack of presence in the ecosystem today. As the steward of the Kin Reserves, we want to address this directly to share context, learnings, and how this grant has helped refine the process going forward.

The Psiphon product and userbase showed the potential to provide value to the ecosystem broadly. After a proposal was submitted, the Kin Foundation made the decision to award a grant to Psiphon based on the size of their audience and to help bridge the development costs associated with a substantive change to their app. The grant was tied to specific milestones for development and user adoption. Shortly after the grant was approved, Psiphon rolled out their first use-case to a portion of their userbase. During this first rollout Psiphon reached the milestones in their grant; however, shortly after, the Psiphon team made the decision to put the integration on pause due to concerns about network capacity stemming from the way in which they wanted to implement Kin into their product. To-date, this implementation has remained on pause.

As a result of this scenario, the Kin Foundation made significant changes to the Grant Program:

1. Milestones in the Grant Program are incremental and discrete, keeping the substance of milestones contextually current to the present state of the ecosystem. Grants are subject to a hold period to keep the incentives of grant recipients aligned to the long-term sustainability of Kin.
2. The Grant Program is an open application process with all applicants subject to the same set of grant parameters that go through a multi-step, multi-party review process, including technical due diligence.
3. Awarded grants are to be communicated transparently so that the Kin Community is aware of grant allocations at the time they are awarded. The first example of this was the Kin Ads Grant.

Going Forward

The Grant Program will continue to evolve over time. While Kin has reached impressive milestones as an Ecosystem collectively, it is still early. The Kin Foundation is committed to an open, transparent, and iterative governance process. We will continue to share insights, learnings, and next steps in the Transparency Reports and Monthly Newsletters. We appreciate the level of engagement and feedback from the community. That is what makes Kin strong — we are building this together.